BILL NUMBER: AJR 7	CHAPTERED  09/03/99

	RESOLUTION CHAPTER   100
	FILED WITH SECRETARY OF STATE   SEPTEMBER 3, 1999
	ADOPTED IN SENATE   AUGUST 31, 1999
	ADOPTED IN ASSEMBLY   JULY 6, 1999
	AMENDED IN ASSEMBLY   JULY 1, 1999

INTRODUCED BY   Assembly Member Maldonado

                        FEBRUARY 16, 1999

   Assembly Joint Resolution No. 7--Relative to the alternative
minimum tax.



	LEGISLATIVE COUNSEL'S DIGEST


   AJR 7, Maldonado.  Alternative minimum tax.
   This measure would urge the Congress of the United States to index
the alternative minimum tax exemption and tax brackets for
inflation.




   WHEREAS, The federal Alternative Minimum Tax (AMT) is intended to
assure that wealthy income taxpayers do not avoid taxation by using
various credits, deductions, and other tax preferences; and
   WHEREAS, The AMT requires an increasing number of taxpayers to
calculate their taxes twice, under two different sets of rules, and
pay whichever tax is higher; and
   WHEREAS, The AMT affected 134,000 taxpayers in 1988, it now
affects nearly one million and will affect five million by 2006; and
   WHEREAS, More than 20 percent of those now paying AMT have
adjusted gross incomes of less than one hundred thousand dollars
($100,000), and nearly 2 percent have adjusted gross incomes of
between thirty thousand dollars ($30,000) and forty thousand dollars
($40,000); and
   WHEREAS, Families in the lowest income tax bracket of 15 percent
who cut their tax bills by taking advantage of the new tuition and
child credits could be forced to pay some taxes at the higher AMT
minimum rate of 26 percent; and
   WHEREAS, The sharp increase in the number of moderate income
earners affected by the AMT is attributable to inflation indexing of
personal exemptions, the standard deduction and tax-bracket break
points, while AMT exemption amounts and tax brackets are not so
indexed; and
   WHEREAS, The AMT's inclusion of lower and lower-adjusted gross
incomes is exacerbated by a strong economy; and
   WHEREAS, The AMT disallows many deductions, credits, and other tax
preferences that taxpayers could otherwise use, such as state and
local taxes; and
   WHEREAS, The AMT distorts economic decisions, especially in
relation to capital formation, by raising marginal tax rates; and
   WHEREAS, Compliance costs related to the AMT amount to at least 30
percent of its current revenue; and
   WHEREAS, The inconsistent tax results between regular income tax
and the AMT create hidden, onerous tax choices, produce conflicting
goals for tax and financial planning, and vastly increase the
complexity of compliance with the income tax law; now, therefore, be
it
   Resolved by the Assembly and Senate of the State of California,
jointly, That California respectfully urges the Congress of the
United States to index the AMT exemption and tax brackets for
inflation; and be it further
   Resolved, That the Chief Clerk of the Assembly transmit copies of
this resolution to the President and the Vice President of the United
States, the Speaker of the House of Representatives, the Senate
Majority Leader, the Senate Minority Leader, the House Majority
Leader, the House Minority Leader, the Chair and ranking minority
member of the Senate Finance Committee, the Chair and ranking
minority member of the House Committee on Ways and Means, and each
Senator and Representative from California in the Congress of the
United States.
